Deal

The Treasury Department is telling its staff not to worry about the "fiscal cliff," an internal memorandum sent to all employees reveals. The memo, which is signed by the deputy secretary of the treasury, Neal S. Wolin, states that "there is no reason why both sides should not be able to come together" to reach a deal.

CNN reports, "US President Barack Obama offered to back away from his position that tax hikes should begin at $250,000 in annual income, delivering a fresh concession to congressional Republicans as talks to avert the fiscal cliff intensified in Washington."

There is a lot of talk about whether Republicans should "give in" on raising taxes on the top 2 percent of income-earners.

Seventy-five percent of the new revenue pulled in by President Barack Obama's "fiscal cliff" plan would go toward new spending, not toward deficit reduction, the Republican side of the Senate Budget Committee contends. Here's a chart, detailing how money from the new tax hikes would be distributed:

There is an increasing feeling that if President Obama’s insistence on my way or the highway produces “a plunge over the fiscal cliff,” catastrophes will follow, not least being a downgrading of our credit rating. Perhaps.

Politico reports:

According to my sources here in Vermont (that would be the Burlington Free Press and Vermont Public Radio) 2/3s of the state's congressional delegation believes the country is likely to go over the fiscal cliff.  The remaining 1/3 is "hopeful" that this bullet can somehow be dodged.

The debt ceiling deal will pass the Senate early this afternoon. No suspense there. But the vote will be worth watching for another reason: Three Republican Senate sources tell TWS that senators who vote against the deal will be ineligible to serve on the so-called “supercommittee” for deficit reduction that the legislation creates.

I understand the debt ceiling deal is probably going to pass. I’m not even comfortable unequivocally urging members to vote against it, given all the real loyalties and future relationships and competing responsibilities actual members have to deal with. And I’m not sure I’d urge anyone to vote against it if he were the 51st or 218th vote, because I don’t know that one could adequately manage, either in the real world or the political one, the consequences of “default.”

Anyone considering opposing the debt ceiling deal will be accused of being ... not just a hobbit (!), but also a totally irresponsible full-faith-and-credit-of-the-U.S.-government defaulter. Not so—if the anti-deal position is not pro-default.

So, anti-dealers could:

We’ve learned a lot from the fight to attach spending cuts to the debt limit increase. Here are five of the lessons:

John Bolton has just issued a thoughtful statement raising “serious questions ... about the national-security implications of the proposed deal to raise the Federal debt ceiling.” Bolton calls attention to the worrisome short-term defense cuts that the deal makes likely, and to the huge medium- and long-term cuts that the deal’s triggering mechanism makes possible.